Proactive Investors - Bank of England Governor Andrew Bailey has said it’s “too early” to talk about interest rate cuts.
Speaking at a conference hosted by the Central Bank of Ireland in Dublin, Bailey said: “The market of course will reach a view. It has to reach a view on the future path of interest rates, I understand that. But we’re very clear, we’re not talking about that.”
Bailey said he is “optimistic” that inflation will come back to the 2% target within two years but that rates will likely need to stay high for longer to make that happen.
Britain’s low growth rate, Bailey said, “complicates the setting of monetary policy.”
He blamed those woes on an ageing population, weak productivity, and a withdrawal of workers from the labor force.
Bailey’s speech followed more ‘dovish’ comments from the Bank’s chief economist Huw Pill who said financial market expectations of a rate cut in August 2024 “doesn’t seem totally unreasonable, at least to me”.
Pill’s words prompted a fall in bond yields as markets repriced expectations for the first cut in interest rates.
Last week, the Bank voted 6-3 to leave interest rates unchanged at 5.25%.